Maritime Trade Notes PDF

MARITIME TRADE Matthieu CHAPELET Table des matières SESSION 4 – 15/11 SESSION 6 – 05/12 Vidéos youtube : 1. https://www.youtube.com/watch?v=U2CLiwjeWdk The ocean shipping industry, vital for global trade, faces price volatility based on demand, as seen during the COVID-19 pandemic and the Suez Canal blockage. Highlights Global Dominance: Oceans cover 75% of Earth, transporting over 80% of goods. Price Volatility: Shipping prices rise with strong demand and drop when demand softens. Economic Interdependence: The ocean shipping sector is closely tied to the global economy. COVID-19 Impact: Pandemic-induced demand surges led to significant shipping delays. Suez Canal Incident: 2021 blockage affected 15% of the global shipping fleet, causing massive delays. Industry Awareness: Many are unaware of major players and operations in the ocean shipping sector. Business Models: Understanding the value chain and market landscape is crucial for grasping this industry. Key Insights Critical Role in Trade: Ocean shipping is essential for transporting goods, making it a backbone of international trade. As such, disruptions can have widespread effects on economies globally. Volatility and Profitability: The industry’s reliance on commodity pricing creates an unpredictable environment for shipping companies, leading to fluctuating profits based on market conditions. Supply Chain Vulnerability: Events like the COVID-19 pandemic illustrate how interconnected global supply chains are; disruptions in shipping can lead to shortages and economic challenges across sectors. Navigational Challenges: Incidents like the Suez Canal blockage highlight the logistical complexities of maritime transport and the potential for significant economic fallout from such events. Business-to-Business Nature: The ocean shipping sector primarily operates as a B2B industry, making it less visible to the general public, despite its significant economic impact. Understanding Market Dynamics: Familiarity with the ocean shipping industry’s key players and market dynamics is essential for stakeholders and policymakers to navigate challenges effectively. Emerging Trends: The industry is evolving with new technologies and practices aimed at improving efficiency and sustainability, responding to growing environmental concerns and market demands. 2. https://www.youtube.com/watch?v=3clLh_XO0Ck Summary The ocean shipping industry consists of container and bulk shipping, each with distinct products, sales channels, and operational models. Highlights - Container Shipping: Uses standardized containers for goods transport. - Shipping Containers: Available in 20 or 40ft sizes; includes FCL and LCL options. - Major Players: Includes well-known companies like Maersk and MSC. - Bulk Shipping: Involves transporting non-containerized goods like oil, minerals, and grain. - Specialty Vessels: Includes tankers for liquids and general cargo vessels for specific dry goods. - Sales Channels: Container space sold through contracts, freight forwarders, and NVOCC. - Transport Models: Container shipping uses a networked transit model, while bulk shipping follows a point-to-point approach. Key Insights - Standardization in Container Shipping: The use of standardized containers facilitates efficient loading and handling, enabling smoother global trade. This standardization significantly enhances logistics operations and minimizes time delays. - Diverse Customer Base: The container shipping segment serves various customers, from large corporations like IKEA to logistics firms, highlighting the industry's adaptability to different market needs. - Complexity in Bulk Shipping: Bulk shipping deals with a range of products, each requiring specialized handling and transport processes, underscoring the need for advanced equipment and safety measures. - Sales Model Differences: Unlike container shipping, bulk shipping relies less on freight forwarders and focuses on direct shipper contracts, indicating a more straightforward, yet less flexible, sales approach. - Transport Models: The contrasting transport models—networked for containers and point-to-point for bulk—reflect the operational efficiencies tailored to the nature of goods being transported. - Safety in Bulk Shipping: The handling of wet bulk goods demands higher safety standards and measures due to their complexity and potential hazards, emphasizing the importance of specialized training and equipment. - Other Segments: While not covered in detail, the presence of other shipping segments like passenger cruises and hybrid vessels indicates a diversified maritime industry, catering to a wide range of transport needs. 3. https://www.youtube.com/watch?v=rXh0NvIIqLw Summary Maritime transport, crucial for global trade, involves various cargo types and specialized ships, each designed for specific goods. Highlights - Container Ships: Transport standardized freight containers, handling a variety of goods. - Bulk Carriers: Move solid cargo in bulk, essential for raw materials like grains and minerals. - Car Carriers: Designed like floating parking garages to transport vehicles efficiently. - Tankers: Carry liquid cargo, including oil and chemicals, with specialized safety equipment. - LNG & LPG Carriers: Transport liquefied gases under strict pressure and temperature controls. - Reefers: Refrigerated ships that carry perishable goods like fruits and vegetables. - Livestock Ships: Transport animals, catering to markets with high livestock demand. Key Insights - Maritime Trade Dominance: Around 90% of global trade relies on shipping, underscoring its economic significance. - Versatile Cargo Handling: Different cargo types require specialized ships, reflecting the complexity of maritime logistics. - Safety Protocols: Tankers have advanced safety systems to minimize risks associated with flammable liquids. - Technological Design: Shipping vessels are engineered specifically for their cargo types, enhancing efficiency and safety. - Perishability Concerns: The use of reefers highlights the importance of temperature control in transporting perishable goods. - Animal Welfare: Livestock ships emphasize humane transport practices in the global trade of animals. - Heavy Lifters: Specialized ships for oversized cargo demonstrate the need for tailored solutions in freight transport. 4. https://www.youtube.com/watch?v=RjRvd04pges Summary An oil tanker is a specialized ship for transporting crude and refined oil, designed for stability and safety during transit. Highlights - Oil Tanker Types: Crude tankers transport unrefined oil, while product tankers carry refined products. - Key Components: Includes pipeline systems, cranes, and accommodation areas for crew. - Cargo Tanks: Designed to store oil, with ballast tanks ensuring stability during transport. - Double Hull Requirement: Protects against leaks and environmental hazards. - Ballast System: Critical for maintaining stability by adjusting the weight distribution. - Water Treatment: Prevents harmful microorganisms from contaminating new locations. - Loading Process: Ensures even weight distribution to prevent accidents during oil transfer. Key Insights - Environmental Protection: Double hull designs are essential for preventing oil spills, safeguarding marine ecosystems from potential disasters. - Stability Management: The use of multiple smaller cargo tanks helps mitigate free surface effects, enhancing the vessel's balance in rough seas. - Advanced Loading Techniques: The sophisticated manifold and pipeline system enable precise loading, ensuring safety and efficiency during operations. - Importance of Water Treatment: Treating ballast water is crucial for maintaining ecological integrity, preventing invasive species transfer between marine environments. - Technology Integration: The incorporation of heating coils in cargo tanks aids in the efficient pumping of viscous oils, showcasing technological advancements in tanker design. - Crew Safety: Emergency escape boats and accommodation areas are designed to prioritize crew safety and comfort during long voyages. - Offshore Transfer Methods: Larger tankers utilize smaller vessels for docking, demonstrating the logistical complexities of oil transportation. 5. https://www.youtube.com/watch?v=X6ylyR3wx3c Summary Bulk carrier ships transport large quantities of dry cargo, playing a crucial role in global trade and economic growth. Highlights - Bulk carriers are vital for transporting dry, unpackaged cargo like grains and minerals. - A Cape Size bulk carrier can carry 2 to 4 million tons of cargo at once. - Cargo holds are designed to protect goods from rain and seawater, featuring hatch covers. - Bulk carriers may have onboard equipment like cranes and conveyor systems for efficient loading and unloading. - Bulk ports specialize in handling specific goods, such as agricultural products or minerals. - Ports are equipped with machinery like conveyors and cranes for efficient cargo operations. - Raw materials from bulk carriers are essential for industries like manufacturing, energy, and agriculture. Key Insights - Economic Significance: Bulk carriers are crucial for global trade, transporting essential raw materials that support various industries and economies. Their capacity significantly impacts market availability and pricing. - Design Features: The unique design of bulk carriers, including multiple large open cargo holds, maximizes efficiency in loading and unloading while protecting cargo from environmental factors. - Port Specialization: Different bulk ports cater to specific industries, such as agriculture or mining, ensuring that the supply chain is tailored to meet distinct market demands. - Cargo Handling Technology: Advanced loading and unloading technologies at ports streamline operations, reducing turnaround time for bulk carriers, which is critical for maintaining trade efficiency. - Transportation Connectivity: Bulk ports are strategically connected to road, rail, and pipeline networks, facilitating smooth transportation of goods from ports to final destinations. - Raw Material Supply: The bulk commodities transported by these vessels serve as essential inputs for manufacturing, energy production, construction, and agriculture, highlighting their importance in the economy. - Environmental Considerations: The design features of bulk carriers and ports aim to minimize environmental impact, ensuring that the transportation of goods is conducted in a sustainable manner. SESSION 1 – 25/10 SHIPPPING INTRODUCTION Different categories of boats Definition of shipping: from one point to another Tanker only has one crane Ship types Total of ships at sea : 50 000 DWT dead weight tons (how much tons it can carry) Containership = 24000 container max SESSION 2 – 04/11 Maritime & environment Maritime industry is supposed to be for envi issue, not a pb but the solution. Clearly, this activity allows the world industry to work, transporting goods in a positive for environment way. Polluting industry but not compared to its role and efficiency). Over 90% of the world’s goods are transported by sea. They are 65/67 000 large ship in the world. Commodities and all goods in the world. 10 billion balk commodities (cement, grain, cereals, coalt…) and others are liquids (gaz, oil…). 2y ago, the Suez canal was blocked by a ship. It didn’t last long less than a week, but it is an example of how much the shipping is needed in the world. States are dependent on maritime trade and activities: - 99% of communications via underwater cables - 90% of world trade is carried by sea Environment and shipping have one thing in common: have to be seen with a 98% of all shipping companies in the world are family owned. They have a real sense on long term, decision can be made in a long time. Environment is ”durable” = sustainable so it has also to be seen in the long term.. You cannot do maritime trade without polluting, but in the same time this IS the sustainable solution (for its efficiency and use). Environment has not always been put on the table when it comes to maritime trade, the arising of the issue is actually quite new in the area, before, people “didn’t think about it or didn’t care that much”. For a long time, we would see maritime trade as only the solution and not the problem. Today, the situation has changed, envi is on everyone’s mind, we took conscious of the importance of it and politics have played a role in that matter also. The other reason why pp of shipping industry have ben made aware is bc they react to society and the concept of rules and regulations created towards envi issues. Those regulations have been made worldwide (IMO) and other in regional areas such as the European level. Norms have been developped to limit the impact of maritime transport on the envi: - = have all shiping pp lower the emission by 40% 2008 => 2050 = ETS (European training scheme) CII, carbon quota, FuelEU - : situation better bc it is treated since almost 20y. Ballast water treatment systemn anti-fueling system, etc. For both types of pollution, the situation is today better than before, we are going in the right direction. Most globalized activity in the world (you have to be able to bunk your ship anywhere, all ports should be equipped with the right energy, that is why changing energies with boat takes time, and is challenging) Considering the constraint imposed by IMO for the 2050 goals, there is not enough money in the industry to change the all propulsion system for all ships, so nobody knows what’s going to happen. The depollution of maritime transport is possible. It will only be possible thanks to the development of different industries such as Most ships are built in the East, some in Europe in Poland. Personal view and solution in which he believes: Provisional solution bf other solution, but it would be efficient and save a lot of emissions. (-15% approximately) Very simple solution, immediate solution to reduce the energy used by shipping (excluding containership – 15% of boats on the sea and ferries in order to stay competitive). Applies mainly to bulk carriers (almost 70% of the overall sea presence). The the delay of arrival of the goods in the situation would be about a day, which doesn’t change a lot, neither the organization, the supply chain or prices of the goods. 1- Speed limitation is regularly introduced by shipowners when the market is bad. The timing is very important 2- In any case, shipowners will have their speed reduced in the coming year bc of IMO strict regulations. containership would have been excluded about the proposal of reducing speed, and it wouldn’t change the world situation or what is happening today. Most of the shipping companies decided not to go there, for safety reason mainly (of the crew and the ship). The decision to go there is dangerous for human life on the boat, but some companies still have agreements and wish to go there. SESSION 3 – 04/11 Barry Rogliano Salles BRS à voir Sovereignty and market independence Sovereignty Is a very vague word but has very practical consequences for any industrialized countries, particularly democracies. Sovereignty has been forgotten for a long time. It has been made a priority again at the age of globalization and free trade. The world is about competition, it is a fight to win market, to sell more and buy cheaper. It is not made of “nice people”. Business is a sport. Sovereignty is the way and capacity for a country to organize and deal with its own strategy. You have the capacity to defend your strategy. It has an impact of the drive of the citizen of a country, your freedom of choice to buy and sell. The playing field : our world in which we do business and travel, IS the playing field for sovereignty. Who controls the sea controls the world. It has always been the case. Today its Russia but MAINLY China. Mecanism of the shipping market Charter parties, main feature of SNP and arbitration In order to understand the mechanism of the shipping Marlet, you must be aware of the different contracts, particularly the charter parties and the bill of lading. Capital cost, the crewing, the maintenance of the ship, bunkers (fuel oils), port use and canal use and brokerage => summarize all expenses around ships In the = ship owner and charterer. Who pays what ? Owner = capital cost Charterer = all the rest. This type of charter party is used as a support for credit and loans. Obligation of means, not obligation of results. Specific concept = arrival of the ship in the port. Depend on how you work the clauses. The (affretement) is the charterer take the ship for a given period, given a period trading area. The ship owner pays for the maintenance. Commonly used in trading commodities except in oils. The description of the ship is made in the contract as well as the consumption and speed of the ship. The ship is limited by the soil closed by iced. = single voyage that is so called spot business, mort of the oil business use spot businesses (like if you call a taxi) or it can be for a given period for voyagers with possible loading port listed in contract and possible port of unloading ($/t). Maintenance is also paid by shipowner, as well as the crew. = sales contract of a secondhand ship. Documentation, concealing the ship, (mortgage certificate, flag, free encumbrances…). Deposit is about 10% of the value. = specification of the ship which has to be given in the contract with accuracy, the price, the ship should be compliant with all the contractual specification (like the size or the speed) Liquidated damage (damages et interets). The payment close is important, CKLD (Contract, Kill lane, Launching, Delivery). If the ship is rejected bc you go beyond on the liquidated damages, then all the money have to be refunded by the builder. = We concider the ship arrives it has a notice of readiness : I am there within the commercial limits of the port. A Notice of Readiness is a document issued by the captain of a ship to showcase readiness for loading or unloading goods from/into his ship. When NOR is issued, it signifies to the person or company in need of the ship to be immediately available for loading or unloading of their goods. NOR is an essential document because it supports the adherence to the time allotted for loading and unloading the charterer's goods. Most parties to a voyage charter make a conditional laytime for the issuance or a valid tender of NOR. In the case where NOR is not issued or is invalid, the charterer will consider the vessel as not readily available on the basis of the agreement. For this, the charterer will not be liable for demurrage. Berth = a ship's allotted place at a wharf or dock. Arbitrators are professionals of the shipping. Disclosure in the UK parties have obligation to disclose all the documents they have at hand (in Paris this isn’t the case) If the captain decides to ground the ship, it has to be intentional that he has save the ship and cargo and all parties will contribute. How much will each of the parties will contribute to the damage ? The concept only exists in shipping. = receipt of the cargo on board, a title of property on the cargo and a contract of transportation. SESSION 4 – 15/11 Bernard MAZUEL 1. Containerization An invention that shaped the world - Invented by McLean in 1955 - Dedicated shipping line called Sealand - First shipment: 1956 - ISO standard : end of 60s/early 70s - Huge strikes from stevedores in early 70 scared to loose their jobs but due to large eco saving, possible for them to be paid by severance fee. SeaLand industries have 36 container ships, 27000 containers and access to over 30 ports shortly after. Some interesting facts - Bf, it has to be loaded by hand, ship carried both passengers and cargoes. It could take days or weeks to unload or reload vessels in the port. - 80 to 90% of all commercial goods are transported in containers, including fresh and refrigerate goods. - Nowadays = 65 million shipping containers in the world, making over 200million trips a year. - 6000 container ships in active use today. Total capacity over 28 Million TEU (TEU : FEET EQUVALENT UNIT). Average size around 4600 TEUs/ vessel TEU (or teu) is the designation for the dimensions of containers. The abbreviation stands for Twenty Foot Equivalent Unit. 1 TEU is a container of 20 feet long, 8'0" wide and usually 8'6" high. In metric terms, a TEU is 6.10 metres long, 2.44 metres wide and 2.59 metres high. Acronyms and deﬁnition - TEU (EVP in French, equivalent Vingt Pied) - FEU: forty-foot Equivalent Unit (2 TEU) - Dry: standard container, as opposed to reeder, ﬂat, open top - HC: High cube = 30cl higher - FCL: Full Container Load - LCL: Less than Container Load (groupage) - CH: Carrier Haulage: Pick-up and/or delivery organized by the carrier - MH: Merchant Haulage: organized by shipper / Conzignee Haulage = traction When receiving a rate calculation from a company, lake sure to multiply it by how many TEUs your shipment consist of, not just how many containers you are shipping. TEU : Twenty-foot Equivalent Unit A TEU or Twenty-foot Equivalent Unit is an exact unit of measurement used to determine cargo capacity for container ships and terminals. This measurement is derived from the dimensions of a 20ft standardized shipping container. Because standard containers can be 20 or 40ft in length, the capacity of a container ship can depend on the ratio of the two sizes. In order to avoid confusion and standardize a ship’s capacity, the number of containers a ship can load is translated into a number of 20ft containers and that measurement is known as TEU. For example, one forty foot container equals two TEUs. What is TEU used for? Understanding how TEU’s work is important because when some shipping companies give rate calculations they sometimes do it per TEU. So, when receiving a rate calculation from a company make sure you multiply it by how many TEUs your shipment consists of, not just how many containers you are shipping.S hipping companies can also quote rates per FEU. TEU is also used in reporting the capacity of container ships and terminals. Additionally, metrics about port throughput are often reported in an amount of TEUs. Container dimensions (ISO) Different types of containers - 20’ General purpose container - 20’ Hard top container - 20’ Open top container - 20’ Refrigerated container - 20’ Flat - 20’ Platform - 20’ tank container - 40’ High cube Refrigerated container - Air freight container Transport documents B/L (bill of lading), Master & House, B/L & SWB (Sea Waybill) A Bill of Lading, orB/L, is alegal contract of carriage issued by a carrier to a shipper. It contains details of the shipment, dates, parties involves, etc. It is a document of title and is negociable if issued “to order”. A bill of lading also serves as a shipment receipt when the carrier delivers the goods at a predetermined destination. A Sea Waybill, or SWB,is a transport document for maritime shipment which serves as evidence of the contract of carriage and as a receipt for the goods, but is not a document of title. Thesea waybillis used for shipments within the same group of companies. A Master B/L is issued by the shipping line to the NVOCC (Non-Vessel Operating Common Carrier). A House B/L is Issued by the NVOCC to his customers. Freight rates Many ways to calculate or indicate a freight rate. - Spot rate : One off - Contract rates: Valid over a season, for large volumes (min-max) - FAK: Freight All Kind (vs per commodity) - All-in: all surcharges included, except THCs - BAF: Bunker Adjustment Factor - CAF: Currency Adjustment Factor (adjusting to currency ﬂuctuation, always compared to the US$) - PSS: Peak Season Surcharge: only applies to imports from Asia, fropm June-July till September/October - THC: Terminal Handling Charges (loading/ofﬂoading at each side) Freight rates can ﬂuctuate widely according to offer and demand. For example, after the COVID, the prices went up more than 5x than before 2020. Alternatives to international maritime transport - Airfreight: Transport time from Asia to Europe: less than 24hours. Cost: Around 1 USD/Kg = 1000$/Ton = +/- 10 to 20 x more expensive than sea-freight - Sea-Air: Maritime leg from Asia to Arabic Gulf (UAE) + Air freight from there to Europe. Exists only on this Asia/Europe leg, as cargo planes to UAE are empty on their return ﬂight to Europe. Cost is twice as much as all-maritime, but transit time gets divided by two. - Rail: about 20 days transit from China port to Duiburg vs around 40 days by sea. Cost: equivalent. Impediment: capacity: 1 train = 90 teus vs 20000+ on a container carrier. Total rail capacity = 900K teus / year vs 450 K teus weekly on ASEU. This alternative is more or less at a stand still since the Ukraine war started in 2022. Increase in size towards gigantism Ranking & market share of major shipping lines Excess delivery of new containerized vessels is anticipated in 2024 (according to Alphaliner) Market size & increase - The global container vessel ﬂeet hasexceeded the30-million TEUmark for the ﬁrst time in history in 2024, as a wave of new container vessels have hit the water. The global ﬂeet expanded by 8% in 2023, delivering 350 new container vessels, representing a record 2.2 million TEU.This superseded the earlier record in 2015 when 1.7 million TEU had hit the water. - In 2024, 478 container vessels boasting a capacity of about 3.1 millionTEUhave been scheduled for delivery, beating the record of 2023 by 41%. Consequently, the container ﬂeet capacity will grow in 2024 by nearly 10%. While the recycling of vessels is also anticipated to increase in the current year, the ﬂeet could rise by almost 2.8 million TEU. - 50% of the capacity on order is for ships from 12,000 to 17,000 Teus. ⇨ The disruption caused by ships being reroutedvia the Cape of Good Hope remains the key ship demand driver : demand became higher than demand, but will switch if and when the situation gets back to normal : Alliances Global alliances –also called strategic alliances -are cooperation agreements on a global scale between liner shipping companies. Established in the mid-1990s, these agreements involve ocean carriers operating on major global routes, in particular on the main East-West trade lanes that concentrate the largest share of the containerized cargo ﬂows: Asia-Europe (ASEU), Asia-US (TP)and US-Europe (TATL). Alliances were born from the increasing difﬁculty for a single shipping line to deploy, on a given sling, a sufﬁcient number of vessels to ensure a weekly service and maximize the ﬁlling rate. Hence the idea to bring their vessels together in a pool (VSA = Vessel Sharing Agreement) : not only do alliances enable the emergence of a huge global network, they also allow the deployment of larger vessels, thus making larger economies of scale, to maintain the frequency of service, to improve the ﬁlling rate and thus to reduce the variable costs per transported unit. Operations costs represent 67% of a shipping line’s costs, in which 46% for bunkers and 21% in port dues. Within an alliance, shipowners remain commercially independent and compete on freight rates. On this basis, they beneﬁt from a derogatory status towards competition law (block exemption) and are allowed by China, USA, and EU, on ground that they beneﬁt shippers by enabling to offer them lower tariffs and a better service level (regular and smooth ﬂows). However the European Commission decided in 2023 not to extend the EU legal framework that exempted shipping lines from EU antitrust rules (CBER: Consortia Block Exemption Regulation) on the basis that it longer promotes competition in the shipping sector and therefore has ended it on 25 April 2024. State of alliances at the end of 2023 - These 3 alliances represent 82.5% of total global capacity, vs. 80.1% in july 2020. They represent 100% of the capacity on the Asia-Europe route. - Early2023, the dissolution of the 2M Alliance between Maersk and MSC was announced. It will take place early 2025. The two companies claimed that a change in their individual business strategies had rendered their alliance unworkable. - This dissolution, plus the EU decision to end the Block Exemption and over-capacity, contributed to reshufﬂe all 3 alliances. As per 2025 - In 2024 Maersk and Hapag Lloyd announced that their alliance, Gemini, will start in 2025. - Also in 2024, Ocean Network Express (ONE), HMM and Yang Ming Marine Transportation (Yang Ming) announced that they will cooperate closely under the new Premier Alliance for 5 years from February 2025. - MSC will not be part of an alliance anymore as from 2025. Global market share (container carrying capacity) of global alliances (1996-2018) Concentration - Economies of scale generated by large vessels tend to create the conditions for a monopoly : The more cargo a shipping line carries, the more it can expect to produce at a lower cost than competition, and to win new market shares on competition, in order to carry ever growing quantities, until it dominates the market. - Individually, it makes sense to acquire larger ships in order to reduce unit costs. - But all shipping lines behave similarly : If one does not succeed in reducing its unit costs thanks to larger vessels, his competitors will do it anyway and he will be losing market shares. Collectively, it would make sense not to add new capacities in order to maintain high freight rates. But individually, knowing competition won’t remain idle, their interest is to keep on reducing their costs, meaning ordering larger ships, thus generating a ﬂeet growth whis is not in line with demand growth. - This spread between offer and demand is obvious in crisis times : in May 2020, at the peak of the Covid crisis, Alphaliner noticed that 551 container-carriers, representing 2.72 M Teus and 11.6% of the global containerized ﬂeet, had been laid up. Then, after two years of super-proﬁts (2021-2022), newbuilding orders have been booming to such an extent that the market is now entering a downcycle, with large surplus capacity being supplied in 2023 / 2024. According to Sea-Intelligence, the earliest recovery to the supply/demand equilibrium will begin in 2028 (this wasbeforethe Red Sea crisis started). - Over-capacity crisis accelerate the sector’s concentration: The top 5 global containerized shipping lines today account for almost 65% of global capacity, which is more than the top 20 in 2005 ! The top 5 market shares was 24.3 in 2000 and 14% in 1990. - As an example, CMA-CGM (itself the merger of two French lines, CMA and CGM in 1996), absorbed in 1998 the national Australian line ANL, then McAndrews in 2002 to develop European feeder services, then Delmas, experts on Africa, in 2005. In 2007, the group acquired CNC (Taïwan), Comanav (Morocco) et US Lines (USA), then OPDR in 2014, NOL (APL) in 2016, Containerships and CEVA (diversiﬁcation in logistics) in 2018. Early 2023 they diversiﬁed in ferries shipping and bought La Méridionale. CMA-CGM is now ranking #2 or 3 worldwide. - The largest new-builds are being deployed on those maritime routes that concentrate the most important traﬁcs on the longest distances, in order to maximise the economies of scale. The Asia-Europe route attracts a large number of mega-carriers, due to the volumes and the length of the journey. Numerous deliveries of VLCCs (Very Large Container Carrier) have regularly generated a structural over-capacity on the main East-West routes. - This over-capacity has been balanced by the introduction, since the 2008 crisis, of «slow-steaming», i.e. reduction of speed from 25 to 18 knots, in order not only to reduce fuel consumption, but also to require a larger number of ships on the same sling. Hence, between Asia and North Europe, 77 days (round trip) and 12 ships are necessary to ensure a weekly service, against 8 ships before slow-steaming. Larger ships compensate for longer transit times, but induce heavier detention costs for shippers (ﬂoating stock). Hubs - Since the 80’s, shipping lines have become global by creating «hubs» in a limited number of ports where their largest vessels can call, and by weaving global networks to and from these hubs (hub and spoke). - Hubs allow shipping lines to serve a huge number of ports via trans-shipment and feedering. In return, feeders also help ﬁlling up «mother vessels». - Ports that are not hubs chosen as become secondary ports. They get «feederized». Less connected ports are disadvantaged : containers may arrive after up to 7 legs, 6 transshipments and 14 handlings. Cascading The ever increasing size of vessels has led to the implementation of what is called «cascading» : As high capacity vessels enter the ﬂeet, their predecessors are distributed on other slings with lesser volumes. The more dense and diversiﬁed is the network, the more ﬂexible is the ﬂeet management (gestion de ﬂotte) and the more easily can the larger ships be smoothly implemented. A cascading effect then takes place : those that become superﬂuous because larger ones have entered the service on their «Trade lane» are redeployed on other slings where they replace smaller ships and so on, until cascading reaches the smallest trade lanes. So, the introduction of large vessels does not only impact those trade lanes where they are being used, but the whole of the maritime transport chain (source IFT 2015). As the largest vessels are being utilized on the Asia-Europe route, cascading ﬁrst affects the Trans-Paciﬁc trade and the American West coast harbours, then the North-South trade lanes : from 2013 to 2022, the size of ships introduced on the Europe - African West Coast trade lane has more than doubled, so African ports are hugely investing and competing in order to become regional hubs. Port of Lomé can already accomodate ships up to 14,000 Teus. Impact on ports The decision made by ship owners a) to set up a hub and spoke network, and b) to redeploy ships with larger capacities on the secondary axes involve the necessary adaptation of the whole ports organizations to these larger ships worldwide, as they must adjust their infrastructures and superstructures to larger vessels : channel and quays dredging, quay length, draught, cranes, etc.. Ports are thus compelled to invest massively (billions) in ever larger infrastructures and superstructures, in order to remain major ports, able to accommodate the largest vessels, but with no such guarantee. As for an example, Le Havre will not be a main port anymore in the new Gemini (Maersk-Hapag Lloyd) services. This has a huge cost and impact not only on ports but also on society at large (source IFT 2015). Most stakeholders are not necessarily in favor of mega-ships : ⇨ Shippers are looking for frequent and reliable services, while larger ships induce less frequent services, unless demand grows at the same rythm, which is not the case. ⇨ Terminal operators are compelled to renew their equipment’s faster than scheduled, in order to absorb the peaks of activity generated by the calls of such vessels. ⇨ Freight forwarders and logisticians fear the frequent «blank sailings» or delays that affect their ﬂows and increase their costs. 2. PORTS A Port organization B Ports infrastructures & superstructures C Quay equipment D Yard equipment E Various types of governance F The French ports system A. PORT ORGANIZATION Port of Sète What’s in a port ? - Port administration ofﬁce - Harbour Master’s ofﬁce - Customs ofﬁce - Protections : Jetty / Jetties - Quays / Quay walls - Terminals (all kinds) - Storage yards - Warehouses (Dry & Cool) - Industries - Maritime services o Pilotage o Towage o Mooring - Other services (Agents, Freight forwarders,.. - Road, Rail & Barge transport - Works : Port Extensions - … Port of Antwerp Port of Antwerp 2022 : - Surface : 130 Km2 - 120+ Km quay walls / 7,000 mooring posts - Connections to more than 800 destinations - Capacity : o 5.5 million m3 liquid storage space o 5.5 million m²of covered dry storage space Total cargo throughput 2022 : 287 MT Containers : 13,5 M Teus (second to Rotterdam : 14,5) 1,400+ companies located in port area - Direct employment : 73,500 - Direct and indirect : 164,000 - Direct added-value : 21B€ Port du Havre - Surface : 10,000 Ha (100 km2) - Length of quay walls : - Connections : 650 ports - Capacity : Oil 640,000 M3 - Total cargo throuput 2022 : 116 MT (Haropa) - Containers : 3.1 M Teus - Direct employment : 1,000 - Direct and indirect : 47,000 + - Direct added-value: 6+ Billion € (2018) - Number of companies in port area : 1,300 + Organization of a container terminal (Tangiers) Crane 30/h/crane mooves Port actors - Ship Owners - Cargo Owners (Importers / Exporters) - Port services : Pilots / Tugboats / Mooring - Port Authority - Maritime Agent or Shipping Agent, integrated or independant - Freight Forwarder - Customs broker - Customs Ofﬁce - Port Police / Gendarmerie - Veterinary Inspection / Phyto-sanitary Inspection - Affaires Maritimes (National Regulations) - Terminal Operators ( Crane operators, Dockers) - Logisticians (groupage, degroupage, distribution,..) - Containers storage & repair operators - Land transport : Road (Trucks), Rail (Trains), River (Barge) Crawler crane or caterpillar crane Conveyer belts E. VARIOUS TYPES OF GOVERNANCE Port authorities role has evolved over time, from “tool port” to “Land port” to “port entrepreneur” Various types of governance F. THE FRENCH PORT SYSTEM In France, there are 2 types of commerce ports: State ports, which are called «Grands Ports Maritimes» (GPMs). - They belong to the State and are under the supervision of the Ministry of Transport or Ministry for Marine Affairs. - Their governance consists of a «Directoire» and a «Conseil de Surveillance» (supervisory board). - Their General Director, also Chairman of the Directoire, is nominated by the state (Conseil des Ministres). - The supervisory board is usually chaired by the local Mayor of the city. - The private sector professionals are represented in the «Conseil de Développement» that only has a consultancy role. There are 6 GPMs in metropolitan France: Dunkirk, HAROPA (Le Havre, Rouen, Paris), Nantes St-Nazaire, La Rochelle, Bordeaux and Marseille-Fos. - There are 4 overseas GPMs: in Martinique, Guadeloupe, French Guyana, and Reunion Island. All other ports, which are called «décentralisés» (decentralized). - They belong to the territory (Région, Département, Communauté de communes, Municipalité,..). - They are run by a board of administrators (Conseil d’Administration) consisting of representatives from the owner of the port and local private sector representatives. - The main ones are: Calais-Boulogne, Brest, Lorient, Bayonne, Port-la-Nouvelle, Sète, Toulon and Nice. SESSION 6 – 05/12 Exam: MCQ + open questions calculation Instructions: DWT 15000T Consumption IFO 30 tpD – 490$/T MDO 5 tpD – 520 $/T Distance 10000 one way (15k) Loadport 15000 $ Disport 15000$ Sea Hazard 2 days (at sea hire 30000$ per day) Brokerage 40 000$ Overhead 3000$ Hire 30000$/day Calculer la durée du voyage : 20 000 thousand miles distance aller retour Time (days) = distance (miles) / speed (miles per hours) Time (days) = 10 000 / 15 (/24 parce qu’on veut en jours et pas en heures) = 55,5 + 2 jours de sea hazard + 2.5 in port (à ajouter à chaque fois) = 60 days Calculer le break even T/C = 60 x 30 000 = 180 000$ prix du hire en tout (hire x nb de jours) Fuel = 57.5 (parce qu’on ne met pas les 2,5 jours en port) x 30 x 490 = 845 250$ Port expanses = 2x15 000 = 30 000$ Brokerage = 40 000 + Overhead = 3 000 Total of the voyage (addition of all totals) = 2 874 250$ total Breakeven: Divided / 15 000 to have the break even since its per T = 191,61$/MT (metric ton) What is per month to compare with the market (calculate equivalent time charter): Income of voyage = 6 000 000$ Distance = 10 000 20 000 both ways Speed = 15k Sea Hazard = 2days Time of sea = 55.5 days + 2,5 port + 2 sea hazard = 60 days Bunkers = 882 000 $ (IFO), 156 000$ (MDO) Port expenses = 30 000$ Brokerage = 40 000$ Overhead = 3 000$ Total variable costs = 1 111 000$ Since Income of the voyage = 6 000 000$ And Variable costs on 60days = 1 111 000$ (1 111 000 x 30,4 (pour calculer au mois)) / 60 = 562 906$ PCM Equivalent time charter = ( (6 000 000 – 1 111 000)/ 60 ) x 30.4 = 2 477 093$ Equivalent time charter = (income – total costs / nb of days) x 30.4 The numbers $562,906 PCM and $2,477,093 PCM in your example represent two different ways to analyze and compare the proﬁtability of the voyage. Here's the breakdown: 1. $562,906 PCM – Fixed Costs Contribution What it means: This value represents the minimum amount per calendar month (PCM) that the voyage contributes toward covering variable costs only (such as fuel, port expenses, and brokerage). It does not take into account the overall proﬁtability of the voyage. Purpose: It helps determine the portion of monthly revenue that must go toward variable costs. This is often used to assess whether a voyage at a speciﬁc freight rate can at least cover its operational (non-ﬁxed) costs. 2. $2,477,093 PCM – Equivalent Time Charter (ETC) What it means: This value represents the average monthly earnings from the voyage after deducting all variable costs. It’s the equivalent of what the shipowner would earn per calendar month (PCM) if this voyage were repeated consistently, factoring in proﬁts. Purpose: It reﬂects the actual proﬁtability of the voyage on a monthly basis. This metric is critical for comparing the voyage’s proﬁtability to the time charter market rates and deciding if the voyage was worth taking. Key Difference $562,906 PCM: Reﬂects the portion of revenue going toward variable costs. It shows how much the voyage costs monthly to operate without considering proﬁts. $2,477,093 PCM: Reﬂects the net earnings (proﬁtability) of the voyage after variable costs. It is used to compare the voyage’s proﬁtability with time charter rates in the market. Why is this important? Market Comparison: The $2,477,093 PCM (ETC) is compared against prevailing market time charter rates to assess if the voyage was proﬁtable or if another employment strategy (e.g., time chartering) would have been better. Operational Insight: The $562,906 PCM ensures that the voyage is at least covering its running costs, even if market conditions are poor. 3 charters: - Time - Voyage - Bareboat Different type of ships, deadweight, lightweight, displacement, plimsoll load lines Sovereignty Financing Containers and ports Oil, bunkers

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